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The Muddled Math of Social Media Marketing

Facebook’s IPO Conundrum

May 22, 2012 By Denny Hatch
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I have spent 50 years in direct marketing. It is a precision business model with three elements that can be described in 85 words:

  • Testing. If something works in a small quantity, you run confirming tests in a larger arena. If the results hold up, you roll out and cream the market.
  • Discipline. Be it direct mail, off-the-page advertising or broadcast, the overriding constraints are size and accessibility of the specific universe and cost-per-thousand.
  • Measurable Arithmetic. Rules include: allowable cost per order, ROI and lifetime value of the customer. Direct marketing arithmetic is precise right down to tenths and hundredths of a percentage—otherwise known as a gnat's eyebrow.

Three key words to successful direct marketing: arithmetic, arithmetic, arithmetic.

How the Internet Knocked This Business Model Into a Cocked Hat
Reaching people via the Internet is basically free, thus blowing the cost-per-thousand and arithmetic constraints to smithereens. The result: 235 billion spam emails per day.

Hearing Social Media Marketers First Hand
I had the opportunity to attend a conference where many of the sessions were devoted to social media.

Disclaimer: I do not have a Facebook page, nor do I trade testimonials on LinkedIn. I do tweet occasionally and currently have 600+ Twitter followers, although I follow no one on Twitter.

My single agenda at that conference was to try and figure out the arithmetic of social media marketing. Much of the lingo of social media presenters went over my head. Fast and furious snippets of techie argot and acronyms flew around the room. Plus the following:

"We want to engage with them-not necessarily sell them anything."

"This is not a direct revenue driver."

"Measure the statistics, metrics."

"Get user generated feedback for your product developers."

"90 percent of business decisions are based on user generated data."

"What are the 'pain points'-or failures?"

"Motto: Always be launching."

"Here's a word that I don't particularly like, but I'll use it: monetize."

"How do you monetize what you are doing?"

"You must know to whom you are talking. Are you reaching out to a 'fly-by' or are you talking to a customer?"



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